Wilson pharmaceutical is planning a 100 million for development of a new cancer drug. the development will be financed with a combination of debt preferred equity and common equity. the firms current capitol structure which considers to be optimal consists pf 30% debt 20% preferred equity and 50% common equity. the firm can issue bond with a cost of 12% before tax. the investment banker expects to sell the issue at its $100 par value per stock with a $14 annual dividend and will charge a 5% commission fee. Wilson expects to use any common equity needed to finalize the expansion through issuing new common stock to the public. Wilson expects the net proceeds from the sale of the common stock to be $30 per share the firm currently pay a dividend of $3.50 per share and expects its earnings and dividends to grow 10% annual rate for the future the firms marginal tax rate is 40%

a. calculate Wilsons cost of preferred stock

b. cost of external equity

c. calculate wacc

Local Co. has sales of $ 10.0 million and cost of sales of $ 6.0 million. Its​ selling, general and administrative expenses are  $ 500,000 and its research and development is $ 1.0 million. It has annual depreciation charges of $ 1.0 million and a tax rate of 35 %. ​Local's gross margin is 40.00​%, its operating margin is 15.00​%, and its net profit margin is 9.75​%. If Local Co. had interest expense of $ 800,000​, how would that affect each of its​ margins?

​Local's new gross margin is ___%,

new operating margin is ___​%,

and new net profit margin is ___​%.

DB company just paid a dividend of $ D0 per share. It is estimated that the company's dividend will grow at a rate of 10 percent per year for the next 2 years, then the dividend is expected to grow at constant rate of 6 percent thereafter. You are also given that DB stock’s has beta of 1.2, and the expected market rate of return is 11% and the risk-free rate is 6%. Based on this, the current price of the DB stock is $28.48. What is the value of D0?

After buying a computer system, Sim Thomas must decide whether to purchase (1) a complete maintenance (or service) policy at a cost of $500, which would cover all maintenance costs; (2) a partial maintenance policy at a cost of $300, which would cover some of the costs of maintenance; or (3) no maintenance policy. The consequences, costs and probabilities are given in the following table:

Using EMV, what do you recommend?

when determinig the finacial objective of the company it is necessary to take three types of policies into account investment policy, financing policy and dividend policy. Discuss the nature of the three types of policy dicissions, comment on how they are interelated and how they may affect the value of the firm.

Your broker offers to sell you some shares of Bahnsen & Co. common stock that paid a dividend of $3.25 yesterday. Bahnsen's dividend is expected to grow at 5% per year for the next 3 years. If you buy the stock, you plan to hold it for 3 years and then sell it. The appropriate discount rate is 9%.

1. Find the expected dividend for each of the next 3 years; that is, calculate D₁, D₂, and D₃. Note that D₀ = $3.25. Round your answer to the nearest cent.
   
   D₁ = $
   D₂ = $
   D₃ = $
   
2. Given that the first dividend payment will occur 1 year from now, find the present value of the dividend stream; that is, calculate the PVs of D₁, D₂, and D₃, and then sum these PVs. Round your answer to the nearest cent. Do not round your intermediate calculations.
   $
   
3. You expect the price of the stock 3 years from now to be $98.76; that is, you expect  to equal $98.76. Discounted at a 9% rate, what is the present value of this expected future stock price? In other words, calculate the PV of $98.76. Round your answer to the nearest cent. Do not round your intermediate calculations.
   $
   
4. If you plan to buy the stock, hold it for 3 years, and then sell it for $98.76, what is the most you should pay for it today? Round your answer to the nearest cent. Do not round your intermediate calculations.
   $
   
5. Use equation below to calculate the present value of this stock.
             
   Assume that g = 5% and that it is constant. Do not round intermediate calculations. Round your answer to the nearest cent.
   $
   
6. Is the value of this stock dependent upon how long you plan to hold it? In other words, if your planned holding period was 2 years or 5 years rather than 3 years, would this affect the value of the stock today, ?
   
   1. No. The value of the stock is not dependent upon the holding period. The value calculated in parts a through d is the value for a 3-year holding period. It is equal to the value calculated in part e. Any other holding period would produce the same value of .
   2. Yes. The value of the stock is dependent upon the holding period. The value calculated in parts a through d is the value for a 3-year holding period. It is not equal to the value calculated in part e. Any other holding period would produce a different value of .
   3. Yes. The value of the stock is dependent upon the holding period due to the fact that the value is determined as the present value of all future expected dividends.
   4. No. The value of the stock is not dependent upon the holding period unless the growth rate remains constant for the foreseeable future.
   5. Yes. The value of the stock is dependent upon the holding period as long as the growth rate remains constant for the foreseeable future.
   
   -Select-

Here is the following information on the Cheesecake Factory, I am trying to answer question 1 below. Can you please help me out? Excel assignment.

• Current Dividend (Source – Yahoo!Finance) $1.28
• Required Return (Estimated) 8.9%
• Current EPS (Source – Yahoo!Finance) $2.14
• Current Book Value Per Share (Source – Yahoo!Finance) $13.24
• Current EBITDA per share (Source – Yahoo!Finance) $5.25
• Current Debt per share è $2.80 Current Cash and Equivalents per share $0.61
• Initial Growth Rate for H-Model (Estimated) 9%
• Terminal Growth Rate for H-Model (Estimated) 3%
• Time to Reach Terminal Growth Rate for H-Model (Estimated) 10 years
• Forecasted Growth Rates (Estimated)
  • Year 1 6%
  • Year 2 9%
  • Year 3 12%
  • Year 4 6%
  • Year 5 4%
  • Years 6 through infinity 3%
• Historical PE, PB and EV/EBITDA (Source – Morningstar and Gurufocus.com)
  • 5-Year Average 19.8 4.1 9.3        
• Comparative PE, PB, and EV/EBITDA for S&P 500 (Source – Morningstar and estimate)
  • 19.2 (5-year avg = 19.6)     3.7 (5-year avg = 2.9)     13.0 (5-year average 12.3)

1. Calculate the price for Cheesecake Factory using the
   1. H-Model
   2. Non-Constant Dividend Valuation Approach
   3. Relative valuation
2. 1. Historical PE, PB, and EV/EBITDA
   2. Comparative PE, PB, and EV/EBITDA (Adjust S&P 500 to reflect Cheesecake Factory’s average discount or premium to the market over the past 5 years. Example, if the S&P 500 had an average PE over the past 5 years of 17.0 and your company had an average PE of 14, then your company has historically traded at 82.35% of the market average PE. Therefore, if the current S&P 500 PE is 17.7, your company should have a PE of 14.58 based on the comparative relative valuation to PE. Take the 14.58 times your firm’s EPS to get fair value using this method.)

What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 10% of par, and a current market price of (a) $54.00, (b) $82.00, (c) $101.00, and (d) $148.00? Round your answers to two decimal places.

1. %
   
2. %
   
3. %
   
4. %

1. Stock Transactions You have decided to purchase 1,000 shares of Caterpillar and short 600 shares of Home Depot. Complete these transactions on Stock-Trak.

2. Stock Transactions The next day, you decide that you want only 600 shares of Caterpillar and want to short 200 more shares of Home Depot. Complete the necessary transactions.

3. Stock Transactions You have now decided to close your long position in Caterpillar and close out your short position in Home Depot. Complete the necessary transactions. What is your total dollar gain or loss on these transactions?

(Please show the steps and use any dollar amount)

To borrow $1,600, you are offered an add on interest loan at 8.2 percent with 12 monthly payments. Compute the 12 equal payments. (Round your answer to 2 decimal places.) Equal Payments

Use the amount you borrowed and the monthly payments you computed to calculate the APR of the loan. Then, use that APR to compute the EAR of the loan. (Do not round intermediate calculations and round your answer to 2 decimal places.) EAR ____ %

Question 1: Good Time Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is 60 per cent and a recession is 40 per cent. It is projected that Good Time will generate a total cash flow of Rs 250 million in a boom year and Rs100 million in a recession. The firm’s required debt payment at the end of the year is Rs 150 million. The market value of Good Time’s outstanding debt is Rs108.93 million. Assume a one-period model, risk neutrality, and annual discount rate of 12 per cent for both the firm’s debt ratio and equity. Good Time pays no taxes.

A) What is the value of the firm’s equity?

B) What is the promised return on Good Time’s debt?

C) What is the value of the firm?

D) How much would Good Time’s debt be worth if there were no bankruptcy costs?

E) What payoff, after bankruptcy costs, do bondholders expect to receive in the event of a recession?

F) What costs do bondholders expect Good Time to incur should bankruptcy arise at the end of the year?

1 (a). Define the followings:

Cost pool

Cost driver

Direct cost allocation

Step-down cost allocation

Direct Cost

Indirect Cost

Fixed cost

Variable cost

(b) Effective cost drivers, and hence the resulting cost allocation system, must have what two important attributes?

(c) What is the better cost driver for the costs of a hospital’s financial services department: patient services department revenues or number of bills generated? Explain your rationale.

Consider a person who begins contributing to a retirement plan at age 25 and contributes for 40 years until retirement at age 65. For the first ten years, she contributes $3,700 per year. She increases the contribution rate to $5,700 per year in years 11 through 20. This is followed by increases to $10,700 per year in years 21 through 30 and to $15,700 per year for the last ten years. This money earns a return of 10 percent.

First compute the value of the retirement plan when she turns age 65. (Round your answer to 2 decimal places.)

Compute the annual payment she would receive over the next 40 years if the wealth was converted to an annuity payment at 9 percent. (Round your answer to 2 decimal places.)

Creative Web Design uses a job-order costing system to track the costs of its web design projects. The company provides complete website design and hosting services. The following table provides data concerning the three design projects that were in process during May. There was no work in process at the beginning of May:

Actual overhead costs were $4,750 for May. Overhead costs are applied to projects on the basis of designer-hours. The predetermined overhead rate is $27 per designer-hour. The Car City and Jan’s Flowers projects were completed in May; the Happy Daycare project was not completed by the end of the month. No other jobs were in process during May.

Required:

1. Compute the amount of overhead cost that would have been charged to each project during May.

2. Prepare a journal entry showing the completion of the Car City and Jan’s Flowers projects and the transfer of costs to the Completed Projects (i.e., Finished Goods) account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3. What is the balance in the Work in Process account at the end of the month?

4-a. What is the balance in the Overhead account at the end of the month?

4-b. What is this balance called?

• Overapplied overhead

• Underapplied overhead

Rachel purchased a car for $17,000 three years ago using a 4-year loan with an interest rate of 9.0 percent. She has decided that she would sell the car now, if she could get a price that would pay off the balance of her loan.

What is the minimum price Rachel would need to receive for her car? Calculate her monthly payments, then use those payments and the remaining time left to compute the present value (called balance) of the remaining loan. (Do not round intermediate calculations and round your final answer to 2 decimal places.)